After an amazing run that began in 2001 and 2002, commodity prices are now falling with the economic downturn. However, Robin Wehbe, Vice President, The Boston Company Asset Management, explains that if you look down the road to the next upturn in the economy, we believe there is a longer-term upward trend in commodities prices that has yet to run its course. Prices have fallen due to weakening demand, not an increase in supply, which for many commodities, such as copper, has been diminishing for the past several decades.  Even if producers were still willing to commit capital today, bringing on new capacity is a major undertaking that takes time, with a number of logistical impediments.  It is not likely that supply will be ready, nor will inventories be there to restrain price acceleration, which could resume the same trajectory we have seen over the past few years.

 

For more information or a hard copy please contact, please contact David Zigas at 617 248-6202.

 

The preceding information is based upon the analysis of historical performance of various asset classes and assumptions with respect to future economic conditions. Past performance is not an indication of future results. This information is not intended to provide specific advice, recommendations or projected returns of any particular BNY Mellon Asset Management  product.